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Gauging the Market and Non-Market Forces in Indian Aquaculture Industry for a Strategic Position in Fish Vaccines Market

Indian aquaculture segment has become a growth engine for the agriculture sector and is postulated to be one of the key sources of food-protein supporting the growing Indian population in coming years. Elsewhere, scholars have demonstrated India’s overall macro-environmental factors being congenial (Pallapothu & Krause, 2013) and the overall market and sales potential as attractive (Pallapothu, 2013). However, in addition to the overall market attractiveness, estimating the competitive forces in an industry is vital to ensure profitability in a new business. As a continuum of previous work (Pallapothu, 2013), this research addresses the market and non-market forces that are currently shaping the Indian aquaculture segment.

Before entering any market, the investor group or the participating organization has to understand the competitive forces that exist within the industry of choice (aquaculture in this case) to gauge the profitability potential of a new business and to strategize its approach on the market positioning to protect its profit share. Michael Porter (1980) defined the industry structure and the competitive forces in interpreting the microeconomics of an industry for the benefit of management strategy development to position itself either by coping or influencing these competitive forces which has gained popularity and some criticism (Prasad, 2011). The framework demonstrated strengths of unraveling each of the market forces and their impact on capturing the company’s share of profit from the pool of industry stakeholders namely, buyers, sellers, new entrants, competitors, and substitute manufacturers (Porter, 2008).

This study not only contributes to the understanding of the Indian aquaculture market but also quantifies each of the competitive forces with consideration of influences from non-market forces such as culture and history of India to further the profit potential of a new fish vaccines business in India. The article is organized as follows. The second section provides an overview of the literature review on market and non-market forces, and the strategic positioning. In section three, a suitable methodology, study framework, and the data sources used in the study will be outlined. The analyses of the key forces and their impact on the profit potential of the entrant in Indian aquaculture industry will be executed, and described in section four. Comparisons are made to similar industries in Chile and Norway, as these two countries are the leaders in Salmonid aquaculture production. Suggestions on how to position the entrant in this industry will be offered taking into consideration the findings from this research and drawing from the ideas available in the extant literature in section five. Finally, conclusions of the research and the direction for future exploration are summarized in section six.

2. Literature Review

Michael Porter (1980) first described the ‘five competitive forces’ as threats posed by the competitors, the buyers, the suppliers, the new entrants, and the substitute makers that not only shape the industry structure and establish rules of competition but enable a company to realize the profit potential in a given industry. Later, Brandenburger and Nalebuff (1995) introduced the ‘complementors’ as the sixth force by using game theory on how interfirm dependencies among counterparts of substitutors could change the game of business by forming strategic alliances. This dependency was further exemplified by Intel’s former Chairman, Andrew Grove (1996) who defined complementors as the ones who share similar business interests and their products offer synergistic properties.

Hax and Wilde (2001) proposed the Delta Model using network theory on profitability and suggested that the firm in question has to focus on its customers’, suppliers’, and complementors’ industry rather than its own to pursue strategy. They argued that complementors are the key players in competitor lock-out and system lock-in based on the resource-based view of the firm, and postulated that a firm’s profits rely on the resources and capabilities that a company is able to appropriate. An understanding of the industry structure and the underlying major forces that limit the firm’s profitability is therefore vital in forecasting a firm’s earning capability and to derive a strategy to defend or influence its position (Porter, 1980).